Ukraine launches big blockchain deal with tech firm Bitfury

NEW YORK Ukraine has partnered with global technology company the Bitfury Group to put a sweeping range of government data on a blockchain platform, the firm’s chief executive officer told Reuters, in a project he described as probably the largest of its kind anywhere.

An interior view of U.S. bitcoin mining company Bitfury's mining farm near Keflavik, Iceland, June 7, 2016. REUTERS/Jemima Kelly

Bitfury, a blockchain company with offices in the United States and overseas, will provide the services to Ukraine, CEO Valery Vavilov said in an interview on Wednesday.

Ukraine’s blockchain initiative underscores a growing trend among governments that have adopted the technology to increase efficiencies and improve transparency.

Blockchain is a ledger of transactions that first emerged as the software underpinning digital currency bitcoin. It has become a key global technology in both the public and private sector given its ability to permanently record and keep track of assets or transactions across all industries.

Ukraine and Bitfury are expected to sign a memorandum of understanding on Thursday, Vavilov said.

Though Vavilov said he was unable to estimate the cost of the project, he said it was the biggest government blockchain deal ever so far. It involves putting all of the Ukraine government’s electronic data onto the blockchain platform.

“A secure government system built on the blockchain can secure billions of dollars in assets and make a significant social and economic impact globally by addressing the need for transparency and accountability,” said Vavilov.

There are other countries that have started blockchain programs, but they are smaller in scope involving one or two sectors, such as land titles and real estate ownership. Countries that have launched blockchain programs include Sweden, Estonia, and Georgia.

Bitcoin mining computers (L) and particle filters (R) that allow in cold air from outside but trap any incoming dust are pictured in Bitfury's mining farm near Keflavik, Iceland, June 7, 2016. REUTERS/Jemima Kelly

“This agreement will result in an entirely new ecosystem for state projects based on blockchain technology in Ukraine,” Oleksandr Ryzhenko, head of the State Agency for eGovernance of Ukraine, said in an emailed response to Reuters questions.

“Our aim is clear and ambitious — we want to make Ukraine one of the world’s leading blockchain nations.”

Ukraine’s deal with Bitfury will begin with a pilot project to introduce blockchain into the country’s digital platform. The areas being explored for the pilot project are state registers, public services, social security, public health, and energy, Vavilov said.

Once the pilot is complete, the blockchain program will expand into all areas, including cyber security.

This is Bitfury’s second government blockchain project. In April last year, Bitfury signed an agreement with Georgia to pilot the first blockchain land-titling registry.